The Monzicorn

Business Insider recently listed what they believe are the 32 FinTech unicorns around the world. Here is their list:

=27. Symphony — $1 billion

=27. TongDun Technology — $1 billion

=27. Funding Circle — $1 billion

=27. Kabbage — $1 billion

=27. 51 Credit — $1 billion

=27. Gusto — $1 billion

21. UiPath — $1.1 billion

=19. AvidXchange — $1.2 billion

=19. Clover — $1.2 billion

18. Robinhood — $1.3 billion

17. Tuandaiwang — $1.4 billion

16. TransferWise — $1.6 billion

15. Revolut — $1.7 billion

14. Affirm — $1.8 billion

13. NuBank — $1-2 billion

12. Coinbase — $1.5 billion-$8 billion

11. Avant — $1.9 billion

10. Zenefits — $2 billion (as of Q2 2015)

9. Adyen — $2.3 billion

8. Klarna — $2.5 billion

7. Oscar — $3.2 billion

6. GreenSky — $3.6 billion

5. Credit Karma — $4 billion

4. SoFi — $4.5 billion

3. PayTm —$7 billion

2. Stripe — $9.2 billion

1. Lu.com — $18.5 billion

It’s interesting as other lists would include firms like Ant Financial as a FinTech unicorn, whilst others would include firms that are now public. Either way, there’s a lot of bright young things out there, although I am still waiting to see a Unicorn Mermaid.

Anyways, there’s another Unicorn about to join the 32 above: Monzo.

The Financial Times reports that Monzo are about to complete a new round of fundraising that will value the firm at $1.5 billion. That’s four times more than the firm was worth in November 2017, which is pretty amazing considering the firm made a pre-tax loss of £33 million on revenues of £1.8 million last year. Even more telling is that customer deposits were £71.2 million at the end of February, equivalent to less than £150 per account. Of the over 870,000 current account holders, only a fifth are paying their salaries into them, although almost half (45%) are putting at least £500 a month into their accounts.

I guess the high valuation is therefore based upon growth metrics. According to the report, Monzo are onboarding 18,000 customers a week and expect to reach 4 million users by 2020. If they achieve that growth, then they're a real contender as a challenger but, again, how many of those customers are switching versus testing?

Meantime, one of my friends pointed out to read the comments on the FT article, which are very interesting. Here’s a small selection:

“Those who think it's nothing new I would say this, how you would like to see your emails 2 days after they were received? Because that's what you see when you login to your online legacy bank. I could login to the Monzo app on my phone right now and tell you how much I'd spent on Eating Out or Bills this month and how much money I'm set to have left over. The only way you'll get that from a legacy bank is logging in, exporting your statement into csv, tagging the entries in Excel and creating a pivot table. Well, if that's what you prefer.....”

“For someone who has never felt in control of their finances, Monzo has been a revelation … easy sign-up, complete transparency on fees, incredibly swift customer service, and an app that enables me to keep track of my spending in real-time.”

“When you can open a bank account, get a £1,000 overdraft, a card delivered next day, identify verified, all while sat on the toilet, the current incarnation of retail banking is dead.”

“As a 34 year old, I got fed up of receiving emoji filled emails that were clearly written for people a decade younger than me.”

“Where is the profit coming from? Only really compelling reason to have an account was heavily subsidised overseas transactions, which they are steadily eroding.”

“Trust is so hard to build, but these guys (and they're really good people, met a few of them) are going to learn its a tough game, and you can't 'market' yourself to sustainability.”

“Another Fintech cash burning machine with nothing really new to offer. I really don't get it.”

“Monzo made large losses in its last financial year because for most of that year it was primarily a prepaid card, paying large amounts to third parties to allow people to put cash on the card. For the last 6-9 months it has a full UK bank account (with the same FSCS protection you have for your money if it was at Barclays or HSBC). Their losses per customer have plummeted since then and they actually make money on new customers now.”

The majority of the negative comments are focused upon Monzo’s losses and lack of lending. That can change over time. The majority of the positive comments are focused upon the user experience, although several users point out that other firms like Revolut offer a better UX.

Ah well, whichever way you look at it, it is a Unicorn now.